Thrift banks seek clarification of BSP cross-selling rules

The Chamber of Thrift Banks is anticipating the issuance of a circular by the central bank on the Phase 2 of the Revised Cross Selling Guidelines this June, but is calling for a clearer definition of “financial conglomerate” in the revised rules.

Cross selling is the presentation and sale of a financial product provided by a different bank or financial institution than the one making the transaction.

The present guidelines of the Bangko Sentral ng Pilipinas (BSP) relax the cross-selling framework by liberalizing the sale or marketing of products by providers who are allied with the bank, or who are part of the same group or financial conglomerate.

In this case, a product provider can sell its products through the partner bank’s branch network and other bank clients. For example, if the parent in a banking group is a universal bank and the subsidiary is a thrift lender, financial products such as insurance can be cross-sold in either bank.

According to CTB President Teodoro Limcaoco, addressing the chamber’s Annual General Membership Meeting Makati on Wednesday, under Phase 2 of the Revised Cross Selling Guidelines, simple insurance products such as traditional life and non-life policies may be cross-sold inside bank premises regardless of whether or not the financial product provider belongs to the same financial conglomerate as the bank, which would be a further expansion and simplification of the cross-selling rules.

However, the CTB president is calling for the BSP to provide a clear definition of “financial conglomerate” in the expected circular.

“For collective investment scheme types of products, the financial provider must belong to the same financial conglomerate as the bank [under the current guidelines]. CTB thus suggests that a clear definition of a ‘financial conglomerate’ be provided in the circular,” he said.

BSP currently defines financial conglomerate as a group of entities whose exclusive or pre-dominant activities consist of providing significant services on at least two different financial sectors such as banking, securities and insurance.

In other matters, Limcaoco said that the chamber is supporting the central bank’s new emphasis on consumer products.

He said that CTB has been working with the BSP and the Bankers Association of the Philippines (BAP) on a uniform loan and mortgage document that hopefully will be used by home buyers and mortgage lenders to speed up transactions, reduce legal risk and promote transparency in loan documentation.

Limcaoco said that the proposed document—which was approved by both the CTB and the BAP—was submitted to the central bank and will be routed to the industry associations for comments.

“This simply emphasizes the importance of collaboration between the BSP and the thrift banking sector. We all know that this sector of the banking industry is the closest to the greater mass of our population composed of the general consumers and the vast number of small and medium-sized enterprises that significantly contribute to the country’s economic progress,” he said.

“It is therefore important that the business interests of the banks and the regulatory requirements are attuned to further strengthen our operational efficiency and enhance our services to clients,” he added.